Bill Would Allow Credit Unions to Increase Lending to Small BusinessesToday, Mark Udall announced that he will reintroduce a bill to help small businesses expand and create jobs by increasing credit unions’ ability to lend to small businesses. Udall spoke Wednesday morning at the Credit Union National Association’s 2011 Governmental Affairs Conference, highlighting the role credit unions can play in stimulating small-business growth and success.
As the economy continues to recover, Coloradans want to expand their businesses and start hiring again, but they are still struggling to get loans from tightened bank credit markets. Currently, credit unions are required to limit small-business lending to no more than 12.25 percent of their total assets. This arbitrary cap unnecessarily restricts how much money credit unions can loan to small businesses and shrinks the pool of credit for entrepreneurs seeking to start or expand their businesses.
The Small Business Lending Enhancement Act would more than double credit unions’ current small-business lending cap, raising it to 27.5 percent of a credit union’s total assets. The bill includes strict criteria that credit unions must meet before they can gradually increase their lending cap, making this a prudent way for credit unions to responsibly increase loans to small businesses. The Credit Union National Association estimates that Udall's bill will increase small-business lending by $10 billion in the first year—including an increase of nearly $200 million in Colorado—and it will produce more than 100,000 new jobs nationwide.
“The solution is elegantly simple: if there are credit unions with capital to lend, and small businesses in their communities that need loans to spur job growth – why not allow our economy to grow?,” Udall said. “My bill would free up capital—without costing taxpayers a dime—so that credit unions can loan to small businesses that need to make payroll, buy inventory or expand their businesses. It is a smart step toward shaping a business environment where entrepreneurship is nurtured, not choked.”
Udall has been working with small-business owners to help get the economy back on track; as part of his innovation agenda, he is working on policies to ensure businesses have the tools they need to succeed and create jobs. Udall had introduced legislation similar to this bill in the 111th Congress. To read about his previous work to help credit unions lend to small businesses, read HERE.
